It’s the final step in your journey towards being a homeowner, and it can be the most stressful. When you go to a real estate closing you’re going to sign mountains of paperwork. You’re also going to need your checkbook. That’s because there are a number of fees that are going to be due on the day of the closing. If you’re not ready for what’s going to happen when you close, it’s going to be a more painful experience than if you know what to expect. At Cliffco Mortgage Bankers, we want our clients to have as much information as possible about the home buying process.
Cliffco Can Help You Achieve the Dream of home Ownership
Cliffco is committed to helping our clients achieve the dream of home ownership. We can help you determine if you can afford a home and how much house you can afford. We’ll help you get pre-approved for a mortgage loan and if you need help qualifying for a mortgage, we’ll tell you what’s available for you. We want to make the process of buying real estate as simple as possible, so we’d like to give you the lowdown on closing costs so you can close the deal smoothly.
Closing Basics and Fees
The purpose of the closing is to legally transfer the title from the home’s seller to the home’s buyer. Closings have changed in recent years, according to the Washington Post. It used to be that several people were at the table on closing day, but that doesn’t happen as often because electronic signatures allow parties to operate remotely. But the parties involved are the buyer, seller, their real estate agents a representative of the title company and possibly some other lawyers or lending institution representative.
The website NerdWallet lists a number of common closing costs. These include, appraisal fees and home inspection fees which range from $300 to $500. There are several fees related to the loan itself such as the application fee which varies with different lending institutions. Lawyer’s fees, which also vary, and the assumption fee. This is paid if you assume the balance of the seller’s mortgage.
Most lenders require the buyer to pay the interest that accrues on the mortgage between the date of settlement and the date your first monthly payment is due. You might have to pay a fee to a mortgage broker if you work with one. It’s usually about 1 or 2 percent of the purchase price. Some buyers like to pay points which reduce the interest rate of the mortgage. One “point” equals one percent of the mortgage.
A major fee can be the loan origination fee. This fee covers things like document preparation notary fees and paying the seller’s lawyer. NerdWallet says this fee is usually about 1 percent of the amount you’re borrowing on the mortgage.
There could be fees related to mortgage insurance. If you have a down payment that’s less than 20 percent, you may have to buy private mortgage insurance. You might have to pay fees to government agencies that insure your mortgage like the Federal Housing Administration, or the Departments of Veterans Affairs or Agriculture. Some lenders require borrowers to pay the first year’s mortgage premium.
There are fees related to titles such as a fee for conducting a title search, which is usually about $200. Lenders often take out insurance in case there’s an error in the title search and buyers will often by it too. Another type of insurance fee involves home owner’s insurance which the lender usually requires. Condos and Homeowner’s Associations often put these in their monthly fees or annual fees which sometimes have to be paid upfront.
Finally, there are taxes to be paid. Usually two months of city and county property taxes are due at closing.
Cliffco Will Help You Navigate the Home Buying Process
The fees you pay will depend on the type of financing you get. Ask Cliffco what types of fees might be associated with your loan. Contact us today.